Crowdfunding: A Modern Form of Financing in Transition

Crowdfunding, also known as crowd financing, has emerged in recent years as a popular alternative to traditional forms of financing. It enables capital seekers, such as startups, medium-sized enterprises, or project initiators, to reach a wide range of investors – the so-called “crowd” – through specialized platforms and thus raise funds for their endeavors. This form of financing not only provides a means of capital acquisition but also fosters direct exchange between project initiators and investors. In Germany, crowdfunding has established itself as an important financing method, particularly for innovative projects in areas such as real estate, renewable energies, and cultural initiatives.

The platform SCANDIC PAY is an example of such a crowdfunding platform that brings together capital seekers and investors. As an intermediary, SCANDIC PAY plays a crucial role in facilitating financing transactions and ensuring compliance with all legal requirements. This article explores the various aspects of crowdfunding, the role of SCANDIC PAY as an intermediary, and the relevant legal framework in Germany as of June 2025.

What is Crowdfunding?

Crowdfunding is a form of financing in which a large number of individuals (the “crowd”) provide funds for a specific project or company through a platform. Unlike traditional financing methods such as bank loans or investments from venture capitalists, crowdfunding enables direct access to a broad pool of potential investors. There are different types of crowdfunding, distinguished by the type of return offered to investors:

• Donation-based Crowdfunding: Donors contribute to a project without expecting a return. This is often used for charitable or artistic projects.
• Reward-based Crowdfunding: Donors receive a non-monetary reward, such as a product or service – for example, a new gadget or a thank-you in a film’s credits.
• Crowdlending: Investors provide loans and receive interest and capital repayment in return, similar to a traditional loan.
• Crowdinvesting: Investors participate in the company or project and receive shares or a profit share in return, similar to an investment in stocks.

Each of these forms has its own legal and regulatory requirements, which must be adhered to by both the platforms and the project initiators. Crowdfunding offers capital seekers the advantage of accessing funds quickly and flexibly, while investors gain the opportunity to directly invest in projects that interest them.

The Role of SCANDIC PAY as an Intermediary

SCANDIC PAY acts as an intermediary under the Crowdfunding Regulation (ECSPR) and is thus a crowd financing service provider. As such, the platform requires authorization from the Federal Financial Supervisory Authority (BaFin) to offer its services in Germany. This authorization is subject to strict requirements to ensure the platform protects investors’ interests and operates transparently.

As an intermediary, SCANDIC PAY connects capital seekers – such as companies or project initiators – with investors. The platform provides an internet-based crowdfunding solution through which investors can participate in various projects. This may involve facilitating loans (crowdlending) or placing transferable securities (crowdinvesting), depending on the type of financial instrument offered.

It is important to note that SCANDIC PAY itself does not issue financial instruments or provide capital. Instead, it acts as a conduit, facilitating the investment process and ensuring compliance with all legal requirements. Think of SCANDIC PAY as a marketplace: here, providers (capital seekers) and buyers (investors) meet, and the platform ensures that transactions are conducted fairly and securely.

Legal Framework in June 2025

The legal requirements for crowdfunding in Germany are outlined in various laws and regulations. As of June 2025, the following frameworks are particularly relevant:

1. Crowdfunding Regulation (ECSPR): Regulation (EU) 2020/1503, also known as the European Crowdfunding Service Provider Regulation (ECSPR), came into force on November 10, 2021, and establishes a unified legal framework for crowd financing services in the European Union. It governs the authorization, organization, and supervision of crowd financing service providers, as well as transparency and marketing communications related to crowdfunding services. In Germany, BaFin is the competent authority for implementing and overseeing the ECSPR. Further information can be found on the BaFin website.
2. Securities Institutions Act (WpIG): This law regulates the provision of securities services and may be relevant if the financial instruments intermediated through the platform are classified as securities. However, crowd financing service providers authorized under the ECSPR do not require additional authorization under the WpIG for services regulated by the ECSPR. Details on the WpIG are available on the website of the Federal Ministry of Finance.
3. Banking Act (KWG): The KWG regulates the banking and financial services sector in Germany. It may be relevant if the platform or the intermediated financial instruments meet certain banking supervisory requirements, such as lending activities. However, crowd financing service providers covered by the ECSPR are exempt from certain authorization requirements under the KWG. Further information on the KWG is available on the BaFin website.
4. Capital Investment Act (VermAnlG): This law regulates the distribution of capital investments, which may include certain forms of crowdfunding instruments, such as subordinated loans. For crowdfunding offers not covered by the ECSPR, the provisions of the VermAnlG may be relevant. Information on the VermAnlG is available on the website of the Federal Ministry of Justice.

These laws and regulations ensure that crowdfunding platforms like SCANDIC PAY adhere to strict standards regarding transparency, investor protection, and risk management. They form the foundation for the secure and trustworthy use of crowdfunding in Germany.

Responsibility of SCANDIC PAY as an Intermediary

SCANDIC PAY takes its role as an intermediary under Germany’s applicable laws very seriously. As a crowd financing service provider, the platform is obligated to protect the interests of all parties involved – particularly investors – and to ensure compliance with all legal requirements. This goes beyond merely facilitating financial instruments and includes a range of measures aimed at strengthening trust in the platform and the entire crowdfunding industry.

Transparency and Information Obligations

One of SCANDIC PAY’s primary obligations is to provide clear, understandable, and comprehensive information to investors. This includes disclosing all relevant details about the offered projects, such as the type of financial instrument, risks, expected returns, and costs. Under the ECSPR, a Key Investment Information Sheet must be prepared for each crowdfunding offer. This document contains essential information in a standardized format and must be provided to investors before they invest. The goal is to enable investors to make informed decisions without technical jargon or hidden clauses.

SCANDIC PAY views this transparency not only as a legal obligation but as a core principle: only those who know exactly what they are investing in can act with confidence. The platform therefore works to present information in a way that is easily understandable, even for individuals without financial expertise.

Investor Protection and Risk Warnings

Investor protection is SCANDIC PAY’s top priority. The platform is required to assess the knowledge and experience of investors, particularly “non-sophisticated investors” (i.e., individuals without extensive financial expertise). This ensures they understand the risks of the investments offered. If necessary, SCANDIC PAY informs investors that an investment may be unsuitable for them. Additionally, the platform provides a loss-bearing capacity simulation to help investors better understand potential risks.

For example, if someone with limited savings wants to invest all their capital in a high-risk project, SCANDIC PAY may advise against it – a protective mechanism that safeguards both the investor and the platform’s integrity.

Compliance with Anti-Money Laundering Regulations

As an intermediary, SCANDIC PAY is also subject to regulations on combating money laundering and terrorist financing. This means the platform verifies investors’ identities and reports suspicious transactions to the relevant authorities. These measures are not only legally required but also demonstrate SCANDIC PAY’s commitment to creating a clean and responsible financial environment.

Code of Conduct and Best Practices

Beyond legal requirements, SCANDIC PAY, as a member of the Federal Crowdfunding Association e.V., has committed to a binding code of conduct. This code establishes additional standards for transparency, fairness, and investor protection. This includes, for example, providing easily understandable terms and conditions and avoiding conflicts of interest. With this voluntary commitment, SCANDIC PAY demonstrates its intent to go beyond legal requirements for the benefit of all stakeholders.

Commitment to All Stakeholders

SCANDIC PAY views its responsibility as an intermediary not merely as a duty but as a commitment to the community that uses the platform. This means considering the interests of both capital seekers and investors equally. For capital seekers, the platform offers a fair opportunity to present their projects, while investors can trust that their investments are handled with care and in compliance with the highest standards. This balance is essential for establishing crowdfunding as a sustainable form of financing.

Conclusion

Crowdfunding offers an innovative and flexible financing option for capital seekers and attractive investment opportunities for investors. Platforms like SCANDIC PAY play a central role in facilitating these transactions by acting as intermediaries and ensuring compliance with all legal requirements. The laws in force in Germany as of April 2025, particularly the Crowdfunding Regulation (ECSPR), provide a clear legal framework that prioritizes investor protection and transparency.

SCANDIC PAY takes its responsibility as an intermediary seriously and is committed to protecting the interests of all parties involved. By adhering to strict transparency regulations, providing comprehensive information, and implementing investor protection measures, the platform contributes to strengthening trust in crowdfunding as a financing method. At the same time, it creates a space where both capital seekers and investors can benefit.

For further information or if you have any questions, please feel free to contact us. Visit us at https://www.ScandicPay.de or reach out directly.

Note: This article was written considering the laws and regulations in force in Germany as of June 2025. The mentioned laws and regulations may change, so we recommend always consulting the latest information on the websites of the relevant authorities.